Jitendra Pandey S/O Vidyashankar Pandey vs Directorate Of Enforcement And Anr
- Court
- Bombay High Court
CNR No : HCBM010327312026
WP.3476.2026.doc
Ajay
IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 3476 OF 2026
Jitendra Pandey .. Petitioner
Versus
Directorate of Enforcement & Anr. .. Respondents
....................
Mr. Ravindra Kadam, Senior Advocate a/w Mr. Shrey S. Lodha, Mr.
Dulraj Jain, Mr. Aryan Kotwal, Ms. Anjali Joshi, Hrutik Chavan and
Aarti Nishad i/by D’vocate Legal LLP, Advocates for Petitioner.
Mr. C.R. Pendse a/w Mr. Atharva S. Jagtap a/w Mr. Amit Mane,
Advocates for Respondent No.1 – ED.
Mr. Amit Munde, APP for Respondent No.2 –State.
......…...........
CORAM : MILIND N. JADHAV, J.
DATE : OCTOBER 27, 2026.
JUDGEMENT:
1.
Heard Mr. Kadam, learned Senior Advocate for Petitioner;
Mr. Pendse, learned Advocate for Respondent No.1 – ED and Mr.
Munde, learned APP for Respondent No.2 –State.
2. Present Petition is filed under Article 227 of the Constitution
of India and Sections 528 and 529 of the Bharatiya Nagarika Suraksha
Sanhita, 2023 seeking to quash and set aside remand orders dated
23.06.2026, 29.06.2026 and 04.07.2026 passed in Remand
Application No.903 of 2026 by the learned Additional Sessions Judge,
Special Court under Prevention of Money Laundering Act, 2002 (for
short ‘PMLA, 2002’) at City Civil and Sessions Court, Mumbai.
Petitioner is also seeking direction declaring arrest of the Petitioner by
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Respondent No.1 – ED in the subject ECIR No. ECIR/MBZO-I/53/2023
dated 26.12.2023 illegal and violative of Section 19(1) of PMLA, 2002
and Articles 14 and 21 of the Constitution of India.
3. Briefly stated, on 06.10.2023 FIR No.294 of 2023 was
registered with Naupada Police Station, Thane for offences punishable
under Sections 409, 420, 467, 468, 34 and 120B of Indian Penal Code,
1860 and 66 (C) & 66 (D) of the Information Technology Act, 2000
against the Petitioner and he was arraigned as accused No.4, however
no specific role was imputed qua the Petitioner.
3.1. On 26.12.2023, Respondent No.1 – ED registered ECIR No.
MBZO-I/53/2023 in relation to predicate offences involved in FIR
No.294 of 2023 wherein proceeds of crime were shown to be Rs.1618
crore. However on 08.01.2024 charge-sheet was filed but Petitioner
was not chargesheeted. However on 31.03.2024, Petitioner was
arrested.
3.2.
On 14.05.2024, supplementary chargesheet was filed
arraigning Petitioner as Accused No.1 for aforesaid offences. It is
alleged that Petitioner in conspiracy with others formed 97 partnership
agreements and 18 private limited companies in the names of gullible
persons by procuring their KYC under the pretext of giving them loan
or job and instead opened 269 mule bank accounts for remitting
foreign currency against freight charges. Further it is alleged that
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Petitioner alongwith others forged several documents including
invoices, bills of lading, 15CA and 15CB Certificates, A2 Forms which
are required to be tendered to Authorized Dealer I Bank for remitting
foreign currency. It is alleged that total amount remitted is Rs.7569
Crore and intent to commit the aforesaid offences was to evade
customs duty. Further it is alleged that amount remitted abroad was
towards the differential payment of the goods imported into India by
under-invoicing the value of the goods.
3.3.
On 07.06.2024, Petitioner was granted regular bail by
learned I/c Judicial Magistrate First Class, Thane. On 02.01.2025
search action under Section 17 of PMLA, 2002 was carried out at the
native place in Uttar Pradesh as well as at residence in Mumbai of
Petitioner, however no incriminating material was recovered. Between
02.01.2025 to 25.02.2026, Petitioner appeared on 30 occasions before
Respondent No.1 – ED and his statements were recorded.
3.4. On 26.02.2026 and 27.02.2026, second search action was
carried out at Petitioner's residence in Mumbai and certain movable
properties were seized and attached. Between 01.03.2026 to
15.05.2026, Petitioner's statement was recorded on 5 occasions but he
was never summoned. On 23.06.2026, Petitioner was arrested from his
residence and remanded to Respondent No.1 - ED's custody for 7 days
by learned Sessions Court. On 25.06.2026, 26.06.2026 and
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27.06.2026, once again Petitioner's statements were recorded. On
29.06.2026 and subsequently on 04.07.2026, Respondent No.1 - ED
filed second and third remand application and sought further custodial
interrogation of Petitioner which was allowed by learned Sessions
Court. Hence, Petitioner filed present Petition to challenge the legality
of his arrest.
4.
Mr. Kadam, learned Senior Advocate appearing alongwith
Mr. Shrey Lodha, Advocate for Petitioner would submit that Petitioner
was arrested despite absence of fresh material or supervening
circumstances for his arrest. He would submit that it is well settled that
power of arrest under Section 19(1) of PMLA, 2000 is a drastic action
and not for the purpose of investigation. He would submit that
therefore non-cooperation cannot be a ground to arrest him under the
aforesaid Section. He would submit that Respondent No.1 – ED failed
to show from the record as to how the Petitioner did not cooperate
and/or was evasive notwithstanding that he appeared for recording of
his statements on 38 different occasions between 02.01.2025 to
27.06.2026 over 18 months and made all disclosures.
4.1. He would submit that power to arrest can and should wait
and power in terms of Section 19(1) of the PMLA, 2000 can be
exercised only when the material with the designated officer enables
him to form an opinion by recording reasons in writing that arrestee is
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guilty of offence. He would submit that necessity of arrest is a vital
factor before arrest is made and old material already in possession of
the investigating agency cannot be used to animate a new arrest. He
would submit that custodial interrogation cannot be sought merely to
facilitate investigation because power to arrest arises only upon
recording satisfaction of guilt of the arrested.
4.2.
He would submit that the gravity of offence does not deter
judicial review of the legality of the arrest of a person under Section
19(1) of the PMLA, 2000. He would submit that legality of “reasons to
believe” has to be examined based on what is mentioned and recorded
therein and the material on record.
4.3. He would refer to and rely upon the following decisions of
the Supreme Court and the High Court of Bombay in support of his
submissions for seeking quashing of the remand orders against
1
Petitioner:- (i) Arvind Kejriwal Vs. Directorate of Enforcement , (ii) V.
2
Senthil Balaji Vs. State of Represented by Deputy Director and Ors. ,
3
(iii) Shankesh Prithviraj Sanghavi Vs. State of Maharashtra , (iv)
4
Radhika Agarwal Vs. Union of India , (v) Pankaj Bansal Vs. Union of
5
India and Ors. , (vi) Rajendra Narpatmal Lodha Vs. Directorate of
6
Enforcement Mumbai and Anr.
1 (2025) 2 SCC 248
2 (2024) 3 SCC 51
3 2026 SCC OnLine Bom 4488
4 (2025) SCC OnLine SC 449
5 (2024) 7 SCC 576
6 Writ Petition(Cri) No.1910 of 2026, Judgment dated 21.09.2026.
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4.4. He would submit that account opening deception, forged
documents, bank presentation, delivery of foreign exchange and
subsequent handling of property are distinct acts having no bearing
whatsoever on the generation of the proceeds of crime. He would
submit that in the instant case the source of money remitted abroad
has no nexus with the criminal activity relatable to the scheduled
offences i.e. under Sections 420, 467 and 120B of IPC. He would
submit that neither of the acts so committed have led to generation of
any money. He would submit that the foundational aspects i.e. there
should be proceeds of crime relatable to the scheduled offence and vice
versa are conspicuously absent. He would submit that there is no
compliance with the mandate of Section 19(1) of PMLA, 2000,
therefore remand orders dated 29.06.2026 and 04.07.2026 issued
against Petitioner are illegal and hence the Writ Petition be allowed.
5.
PER CONTRA , Mr. Pendse, learned Advocate for Respondent
No.1 - ED would submit that Petitioner controlled bank accounts of
shell entities used for fraudulent foreign remittances to the tune of
Rs.7358 Crore. He would submit that statements recorded of directors
of said shell entities state that Petitioner and his associates approached
them to act as dummy directors and that their signatures were forged.
He would submit that Petitioner has admitted his complicity in some
statements recorded under Section 50 of PMLA, 2000 that he
fraudulently remitted money abroad by incorporating dummy firms
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and presenting forged bills of lading, invoices and other banking forms
such as A2, 15CA, 15CB etc. He would submit that Petitioner also
earned commission for doing so and further integrated the same in
formal economy.
5.1.
He would submit that Petitioner used services of Sahakari
Bank for layering of proceeds of crime earned by him in the bank
accounts belonging to him and his family members and close
associates. He would submit that in that aspect statements of Mr.
Kedar Dighe and Mr. Gaurav Daple corroborate with the facts of the
case. He would submit that Petitioner also admitted that he earned
Rs.17-18 Crore in the hawala set up. He would submit that Petitioner
has also disposed off properties acquired through proceeds of crime.
5.2. He would submit that Petitioner was not cooperating with
the investigation and giving evasive replies despite having given
multiple opportunities. He would submit that Petitioner has not
disclosed complete details of persons and entities involved in the illegal
remittances, the owner of such funds remitted abroad, names of
intermediaries who pumped funds into the bank accounts of the
companies controlled by him, and names of the ultimate owners of the
funds and has been withholding crucial information.
5.3. He would submit that Petitioner’s arrest was not illegal as it
was done to trace complete network of dummy firms involved in his
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hawala nexus as the same was not disclosed till date. He would submit
that his custody was necessary to trace end use of Rs.7358 Crore
remitted abroad and full extent of proceeds of crime earned by him. He
would submit that Petitioner's arrest is necessary as he disposed off
properties after initiation of investigation under PMLA, 2000.
Therefore, he would submit that the action initiated against Petitioner
was for identification and ascertainment of role of RTGS Entry
Operators, Importers, Traders and other persons who formed part of
the hawala nexus and hence it cannot be said that procedure as per
Section 19(1) of PMLA, 2000 is not complied with. Hence, he would
persuade the Court to dismiss the Petition.
6. I have heard the learned Advocates appearing for the
respective parties and with their able assistance, perused the record of
the case. Submissions made by learned Advocates at the bar have
received due consideration of the Court.
7. At the outset it is clearly seen that there are two versions of
events narrated by both parties. However, upon perusal of the record
of the case, it is evident that the Petitioner has already furnished the
information sought from him during the period from 28.02.2026 to
27.06.2026. It is seen that during the said period, Petitioner’s
statements were recorded on several occasions as is evident from the
compilation of additional documents and as appended from page Nos.
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887 to 1186. It is seen that before Petitioner's arrest on 23.06.2026, his
statements were recorded for 5 times on viz., 28.02.2026, 01.03.2026,
09.03.2026, 12.05.2026 and 15.05.2026 and thereafter also on three
occasions viz.,25.06.2026, 26.06.2026 and 27.06.2026. Prior thereto
his statements were recorded on 30 occasions between 02.01.2025 to
25.02.2026 over a period of 14 months. From perusing the answers
given and disclosures effected it is evident that Petitioner cooperated
with Respondent No. 1 – ED from time to time.
8.
In so far as present matter is concerned the issue before me
is very narrow which challenges the legality of arrest of Petitioner
thereby challenging the remand orders passed by Trial Court
fundamentally on the premise that there is:- (i) no need and necessity
to arrest, and (ii) absence of any new or fresh incriminating material,
between 15.05.2026 to 23.06.2026 having regard to continued
cooperation of the Petitioner. It is seen that Petitioner has appeared
before the investigating authority for recording of his statements for
over 38 times over a period of 18 months in all 30 times.
9. The present issue can be safely decided on the basis of
interpretation of the statutory provisions of Section 19 read with
Section 50 of the PMLA. Both the learned Advocates at the bar have
laid substantial stress on interpretation of the provisions of Section 19,
since the Petitioner has been arrested. For ease of reference, Section 19
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of the PMLA is reproduced hereunder and it reads thus:-
“19. Power to arrest.— (1) If the Director, Deputy Director,
Assistant Director or any other officer authorised in this behalf by
the Central Government by general or special order, has on the
basis of material in his possession, reason to believe (that reason
for such belief to be recorded in writing) that any person has been
guilty of an offence punishable under this Act, he may arrest such
person and shall, as soon as may be, inform him of the grounds for
such arrest.
(2) The Director, Deputy Director, Assistant Director or any other
officer shall, immediately after arrest of such person under sub-
section (1), forward a copy of the order along with the material in
his possession, referred to in that sub-section, to the Adjudicating
Authority, in a sealed envelope, in the manner, as may be
prescribed and such Adjudicating Authority shall keep such order
and material for such period, as may be prescribed.
(3) Every person arrested under sub-section (1) shall, within
2
twenty-four hours, be taken to a [Special Court or] Judicial
Magistrate or a Metropolitan Magistrate, as the case may be, having
jurisdiction:
Provided that the period of twenty-four hours shall exclude
the time necessary for the journe y from the place of arrest to the
1
[Special Court or] Magistrate’s Court.”
10. Sub-section (1) of Section 19 states that "the concerned
officer has on the basis of material in his possession, reason to believe
that any person has been guilty of an offence punishable under PMLA
may arrest such person and shall inform him of the grounds for such
arrest." The crucial words occurring in this Sub-section are "……. has
on the basis of material in his possession……. ". Thus, it is the
satisfaction of the Authorized Officer to arrive at the reasons to believe
that a person is guilty on the basis of material in his possession
( emphasis supplied ).
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11. In the present case, on the basis of the material in possession
with the Authorized Officer, he has infact under the provisions of
Section 50 filed an Application for the third time before the Special
Court on 04.07.2026 to record the Petitioner's statements as
contemplated by PMLA. This Application dated 04.07.2026 is
appended at Exhibit – ‘O’ - page No.833 and both the learned
Advocates have taken me through the same albeit attempting to
interpret it differently. It is seen that by the remand order dated
04.07.2026 by which Petitioner's judicial custody was extended till
18.07.2026, it is recorded that learned Advocate for the accused has
not objected for judicial custody. Remand order dated 04.07.2026 is
appended at Exhibit – ‘P’ at page No.844 of the Petition.
12.
At this juncture, it will be worthwhile to note and reproduce
the provisions of Section 50 of the PMLA which concern powers of
authorities regarding summons, production of documents and to give
evidence, etc.. Section 50 of PMLA reads thus:-
“50. Powers of authorities regarding summons, production of
documents and to give evidence, etc. — (1) The Director shall, for
the purposes of section 12, have the same powers as are vested in a
civil Court under the Code of Civil Procedure, 1908 (5 of 1908)
while trying a suit in respect of the following matters, namely:-
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any
officer of a [reporting entity] and examining him on oath;
(c) compelling the production of records;
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and
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documents; and
(f) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy
Director or Assistant Director shall have power to summon any
person whose attendance he considers necessary whether to give
evidence or to produce any records during the course of any
investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in
person or through authorised agents, as such officer may direct,
and shall be bound to state the truth upon any subject respecting
which they are examined or make statements, and produce such
documents as may be required.
(4) Every proceeding under sub-sections (2) and (3) shall be
deemed to be a judicial proceeding within the meaning of section
193 and section 228 of the Indian Penal Code (45 of 1860).
(5) Subject to any rules made in this behalf by the Central
Government, any officer referred to in sub-section (2) may
impound and retain in his custody for such period, as he thinks fit,
any records produced before him in any proceedings under this
Act:
Provided that an Assistant Director or a Deputy Director shall not-
(a) impound any records without recording his reasons for so
doing; or (b) retain in his custody any such records for a period
exceeding three months, without obtaining the previous approval
2
of the [Joint Director].”
13. Sub-section (2) of Section 50 states that the Authorized
Officer shall have power to summon any person whose attendance he
considers necessary whether to give evidence or to produce any record
during the course of any investigation or proceeding under PMLA.
Sub-section (3) states that all persons so summoned shall be bound to
attend in person or through authorized agent as such officer may direct
and shall be bound to be examined or make statements and produce
such documents as may be required.
14. In view of the above provisions, when the Application dated
04.07.2026 appended at page No.833 is seen, it specifically reads that
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it is made under Section 50(2) and (3) of the PMLA qua the Petitioner.
In paragraph No.18 of the said Application, it is stated that in
statement dated 09.03.2026, Petitioner admitted that over the past few
years he was using bank accounts in his name and in the names of his
family members for depositing cash and funds generated through his
hawala operations, and that these accounts were also used for routing
cash through a cheque-discounting mechanism wherein, in exchange
for cash, he procured Pay Orders issued from bank accounts
maintained in the names of shell/ dummy entities with the said Bank,
which were further utilized for acquisition of properties beneficially
owned by him.
15. In paragraph No.19 of the said Application, it is further
stated that investigation under PMLA has revealed that during the
period of the last 4-5 years, Petitioner acquired large number of
properties amounting to several crores of rupees, in his name or in
names of his family members and close accomplices viz. Kedar Dighe,
Ashish Desai and others, and he has purposefully disposed of / sold
many immovable properties with the sole intent of layering and
laundering the proceeds of crime and hiding the same from legal
proceedings such as attachment.
16. In paragraph No.24 of the said Application, it is further
stated that in spite of multiple opportunities accorded to Petitioner, he
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has not disclosed the complete details of owners of the funds remitted
by him, the foreign recipients and ultimate beneficiaries of such funds,
and the intermediaries involved in the alleged illegal remittances. It is
averred that Petitioner has disclosed names of some intermediaries
who provided the amounts into the bank accounts of entities controlled
by him but has not disclosed the ultimate owners of such funds, and is
withholding crucial information from investigation and is evasive and
non-cooperative
17.
As a sequitur of these reasons, in paragraph No.29,
Respondent No.1's case is that the Respondent No.1 - ED requires to
question the Petitioner and therefore prays for permission to record the
statement of the Petitioner. This Application is allowed by the Special
Court on the same day vide order dated 04.07.2026.
18. Thus, it is seen that the Application made by Respondent
No.1 under the provisions of Section 50 and more specifically for
compliance with Sections 50(2) and (3) having been allowed itself
shows that the Respondent No.1 has invoked the said statutory
provision to confront and question the Petitioner with the material
which it has in its possession. It is an admitted fact that from the date
of Petitioner's arrest i.e. 31.03.2024 and the ECIR having been filed,
Respondent No.1 collected material and recorded various statements
which according to them, were required to be confronted with the
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Petitioner. It is also an admitted position which has been duly and
candidly admitted by the learned Advocate for ED during his
th
submissions that between 22.05.2026(Petitioner’s 5 statement
recorded) and 23.06.2026 (when Petitioner was arrested), there was
no new, incriminating, or extraneous material or development which
was unearthed by Respondent No.1 on the basis of which the
Petitioner was arrested. He would however justify this issue by arguing
that power under Section 19 is such that once there is satisfaction of
the Authorized Officer at any stage and he has reasons to believe that
any person is guilty of an offence, he can arrest such person by
following the procedure prescribed therein, notwithstanding the fact
that, at the time of arrest any other statutory procedural requirement
invoked by the Authorized Officer / Agency may have remained
pending. I respectfully disagree with this submission made by the
learned Advocate for ED for the simple reason that power to arrest is a
very drastic and extreme action. In fact, sub-section (1) of Section 19
specifically uses the word 'may arrest' which is again discretionary.
Further power to investigate, summon and confront exercised under
Section 50(2) and (3) is a statutory power which if invoked cannot be
simply wished away, since invoking this power, the Authorised Officer
has already made up his mind to investigate and question the accused
person on the basis of the very same material in his possession and
custody.
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19. However, in the present case, once a very valuable statutory
power having been invoked by Respondent No.1 under Section 50 and
more specifically under Section 50(2) and (3), then it cannot be open
to Respondent No.1 to forego the same and notwithstanding
completion of that action invoke Section 19 to arrest the Petitioner,
unless a very strong and fresh circumstance and material incriminating
the Petitioner is placed on the record before the Court and the Court
feels that arrest is absolutely imminent on the basis of such material
and records its reasons to believe on the basis of such new found
material. This is primarily because sub-section (4) of Section 50
categorically states that every proceeding under sub-sections (2) and
(3) shall be deemed to be a judicial proceeding within the meaning of
Section 193 and Section 228 of the Indian Penal Code, 1860 (for short
‘IPC’). Section 193 of the IPC reads thus:-
“193. Punishment for false evidence.— Whoever intentionally gives
false evidence in any stage of a judicial proceeding, or fabricates
false evidence for the purpose of being used in any stage of a
judicial proceeding, shall be punished with imprisonment of either
description for a term which may extend to seven years, and shall
also be liable to fine; and whoever intentionally gives or fabricates
false evidence in any other case, shall be punished with
imprisonment of either description for a term which may extend to
three years, and shall also be liable to fine.
Explanation 1.— A trial before a Court-martial is a judicial
proceeding.
Explanation 2.— An investigation directed by law preliminary to a
proceeding before a Court of Justice, is a stage of a judicial
proceeding, though that investigation may not take place before a
Court of Justice.”
Illustration A, in an enquiry before a Magistrate for the purpose of
ascertaining whether Z ought to be committed for trial, makes on
oath a statement which he knows to be false. As this enquiry is a
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stage of a judicial proceeding, A has given false evidence.
Explanation 3.— An investigation directed by a Court of Justice
according to law, and conducted under the authority of a Court of
Justice, is a stage of a judicial proceeding, though that inves-
tigation may not take place before a Court of Justice.
Illustration A, in any enquiry before an officer deputed by a Court
of Justice to ascertain on the spot the boundaries of land, makes on
oath a statement which he knows to be false. As this enquiry is a
stage of a judicial proceeding. A has given false evidence.
20. Explanation 2 and Explanation 3 to Section 193 prima facie
apply to the present case. This is so because Respondent No.1 has
chosen to invoke the provisions of Section 50(2) and (3) readwith (3)
on the basis of the very same material in its possession to interrogate
and record the statement of Petitioner which is the same material for
effecting his arrest. Therefore, once this satisfaction stands recorded by
the first Application filed by Respondent No.1 on 23.06.2026 and the
said Application having been allowed by a judicial order of the Special
Court, unless and until there is prima facie fresh incriminating material
or such supervening circumstances which were not there before the
Authorised Officer earlier and which came to the knowledge of
Respondent No.1 later, Respondent No.1 cannot abandon the exercise
which has been permitted by Court by order dated 23.06.2026 and
simultaneously invoke the provisions of Section 19 to arrest the
Petitioner by furnishing him the ground of arrest on the basis of the
very same material which was already in possession of Respondent
No.1. It is seen that said remand period was further extended by fresh
remand orders dated 29.06.2026 and 04.07.2026 on the basis of very
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same material.
21. Though Mr. Pendse has persuaded me and taken me through
the grounds of arrest to argue the gravity of the offence concerned,
that will not deter me from linking the said gravity of the offence to
the issue which I am required to decide in this Petition, once it is
brought to my notice that Respondent No.1 had made up its mind and
obtained a judicial order from the Court to investigate, confront and
record further statement of the Petitioner which was allowed by the
Court. It cannot be lost sight of that prior to this Petitioner has
recorded his statements on 38 different occasions for over 18 months
and therefore based on the material disclosed by his further statements
were to be recorded for which the Application dated 04.07.2026 who
made and allowed by the Court. It is also prima facie evident from the
material placed on record that no new material whatsoever has
surfaced between 22.05.2026 and 23.06.2026 so as to take the drastic
step of arresting the Petitioner without recording his statement. This
has been accepted by Respondent No.1 also during the course of
arguments, but it is its contention that the gravity of the offence can
authorise such arrest.
22. In the aforesaid background, this Court is called upon to
judicially review the legality of the arrest of the Petitioner. It is seen
that power to arrest under Section 19(1) is not for the purpose of
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investigation as held in paragraph No.34 of the decision in the case of
Radhika Agarwal (supra) . Power to arrest can and should wait and the
power in terms of Section 19(1) of the PMLA can be exercised only
when the material with the designated officer enables him to form an
opinion by recording reasons in writing that the arrestee is guilty. In
the present case, when the designated officer has himself filed the first
Application dated 23.06.2026 wherein he himself, in paragraph
No.31(i) to 31(v), calls upon the Court to allow him to examine,
confront the Petitioner with the material in his possession and record
his statement on the basis of the submissions made in paragraph
Nos.22 to 26 of the said Application appended at Exhibit – ‘J’ at page
No.489 of Petition, then in such a case, by foregoing the exercise of
recording the statements, Respondent No.1 cannot arrest the
Petitioner. Such exercise of power of arrest shall amount to a
colourable exercise of power on the part of Respondent No.1 - ED.
th
23. It is seen that Petitioner's 5 statement was recorded on
15.05.2026. It is seen that despite having period of more than a
month, no attempt was made to question the Petitioner before he was
arrested on 23.06.2026. In that view of the matter, Petitioner's non-
cooperation or evasiveness would never arise, rather there would be a
question mark on the conduct of the Respondent No.1. The Application
dated 23.06.2026, does not refer to any supervening circumstances
and hence, there was no need and necessity to arrest the Petitioner at
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all.
24. The Division Bench of the Karnataka High Court in the case
7
of Deepak Singh Vs. Directorate of Enforcement , the Court has held
that necessity of arrest is a vital factor before arrest is made and old
material already in possession of the investigating agency cannot be
used to animate a new arrest, which should be necessitated by fresh
material. The Court has also held that custodial interrogation cannot
be sought merely to facilitate investigation, because power to arrest
arises only upon recording satisfaction of guilt of the arrested /
accused.
25.
Reliance is placed on the decision in Radhika Agarwal
(supra) , particularly paragraphs 91 to 95 thereof, which read as
follows:-
“ 91. However, when the legality of such an arrest made under the
special Acts like PMLA, UAPA, Foreign Exchange, Customs Act, GST
Acts, etc. is challenged, the Court should be extremely loath in
exercising its power of judicial review. In such cases, the exercise of
the power should be confined only to see whether the statutory and
constitutional safeguards are properly complied with or not,
namely, to ascertain whether the officer was an authorised officer
under the Act, whether the reason to believe that the person was
guilty of the offence under the Act, was based on the “material” in
possession of the authorised officer or not, and whether the
arrestee was informed about the grounds of arrest as soon as may
be after the arrest was made. Sufficiency or adequacy of material
on the basis of which the belief is formed by the officer, or the
correctness of the facts on the basis of which such belief is formed
to arrest the person, could not be a matter of judicial review.
92. It hardly needs to be reiterated that the power of judicial review
over the subjective satisfaction or opinion of the statutory authority
would have different facets depending on the facts and
circumstances of each case. The criteria or parameters of judicial
review over the subjective satisfaction applicable in service related
cases, cannot be made applicable to the cases of arrest made under
7 2026 SCC OnLine Kar 7332
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the special Acts. The scrutiny on the subjective opinion or
satisfaction of the authorised officer to arrest the person could not
be a matter of judicial review, inasmuch as when the arrest is made
by the authorised officer on he having been satisfied about the
alleged commission of the offences under the special Act, the
matter would be at a very nascent stage of the investigation or
inquiry. The very use of the phrase “reasons to believe” implies that
the officer should have formed a prima facie opinion or belief on
the basis of the material in his possession that the person is guilty
or has committed the offence under the relevant special Act.
Sufficiency or adequacy of the material on the basis of which such
belief is formed by the authorised officer, would not be a matter of
scrutiny by the courts at such a nascent stage of inquiry or
investigation.
93. As held in Adri Dharan Das v. State of W.B. [Adri Dharan Das v.
State of W.B., (2005) 4 SCC 303 : 2005 SCC (Cri) 933] , ordinarily
arrest is a part of the process of investigation intended to secure
several purposes. The accused may have to be questioned in detail
regarding various facets of motive, preparation, commission and
aftermath of crime and the connection of other persons, if any, in
the crime. There may be circumstances in which the accused may
provide information leading to discovery of material facts. It may
be necessary to curtail his freedom in order to enable the
investigation to proceed without hindrance and to protect witnesses
and persons connected with the victim of the crime, to prevent his
disappearance, to maintain law and order in the society, etc. For
these or such other reasons, arrest may become an inevitable part
of the process of investigation.
94. It is pertinent to note that the special Acts are enacted to
achieve specific purposes and objectives. The power of judicial
review in cases of arrest under such special Acts should be
exercised very cautiously and in rare circumstances to balance
individual liberty with the interest of justice and of the society at
large. Any liberal approach in construing the stringent provisions of
the special Acts may frustrate the very purpose and objective of the
Acts. It hardly needs to be stated that the offences under the PMLA
or the Customs Act or FERA are the offences of very serious nature
affecting the financial systems and in turn the sovereignty and
integrity of the nation. The provisions contained in the said Acts
therefore must be construed in the manner which would enhance
the objectives of the Acts, and not frustrate the same. Frequent or
casual interference of the courts in the functioning of the
authorised officers who have been specially conferred with the
powers to combat the serious crimes, may embolden the
unscrupulous elements to commit such crimes and may not do
justice to the victims, who in such cases would be the society at
large and the nation itself. With the advancement in technology,
the very nature of crimes has become more and more intricate and
complicated. Hence, minor procedural lapse on the part of
authorised officers may not be seen with magnifying glass by the
courts in exercise of the powers of judicial review, which may
ultimately end up granting undue advantage or benefit to the
person accused of very serious offences under the special Acts. Such
offences are against the society and against the nation at large, and
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cannot be compared with the ordinary offences committed against
an individual, nor the accused in such cases be compared with the
accused of ordinary crimes.
95. Though, the power of judicial review keeps a check and balance
on the functioning of the public authorities and is exercised for
better and more efficient and informed exercise of their powers,
such power has to be exercised very cautiously keeping in mind
that such exercise of power of judicial review may not lead to
judicial overreach, undermining the powers of the statutory
authorities. To sum up, the powers of judicial review may not be
exercised unless there is manifest arbitrariness or gross violation or
non-compliance of the statutory safeguards provided under the
special Acts, required to be followed by the authorised officers
when an arrest is made of a person prima facie guilty of or having
committed offence under the special Act.”
26.
The power of judicial review in cases of arrest under such
Special Acts like the PMLA should be exercised very cautiously and in
rare circumstances to balance individual liberty with the interest of
justice and the society at large. Mr. Pendse would argue that minor
procedural lapses on the part of the Authorized Officers may not be
seen with a magnifying glass by the Courts in exercise of the powers of
judicial review which may ultimately end up granting undue advantage
or benefit to the person accused of very serious offences under the
Special Acts. H e would contend that such offences are offences against
the society and nation at large and cannot be compared with ordinary
offences committed against an individual nor can the accused persons
in such cases be compared with those accused of ordinary crimes. This
submission is based on the observations made in paragraph Nos.91 to
95 which is seen to be the concurring view of Justice Trivedi, which
begins from paragraph No.83 of the aforesaid judgement. The majority
view is returned by the Honorable the Chief Justice in the said
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judgment. Paragraph Nos.1 to 32 thereof are most relevant and in
paragraph No.33, it is held as under:-
“33. In Arvind Kejriwal [Arvind Kejriwal v. Enforcement
Directorate, (2025) 2 SCC 248 : (2025) 1 SCC (Cri) 695] , a
combined reading of Pankaj Bansal v. Union of India [Pankaj
Bansal v. Union of India, (2024) 7 SCC 576 : (2024) 3 SCC (Cri)
450], Prabir Purkayastha v. State (NCT of Delhi) [Prabir
Purkayastha v. State (NCT of Delhi), (2024) 8 SCC 254 : (2024) 3
SCC (Cri) 573] , and Vijay Madanlal Choudhary v. Union of India
[Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 :
(2023) 21 ITR-OL 1] was adopted by this Court. It was held that
the power to arrest a person without a warrant and without
instituting a criminal case is a drastic and extreme power.
Therefore, the legislature had prescribed safeguards in the
language of Section 19 itself which act as exacting conditions as to
how and when the power is exercisable. These safeguards include
the requirement to have “material” in the possession of DoE, and on
the basis of such “material”, the authorised officer must form an
opinion and record in writing their “reasons to believe” that the
person arrested was “guilty” of an offence punishable under the
PML Act. The “grounds of arrest” are also required to be informed
forthwith to the person arrested.”
27. The aforesaid concussion as observed in paragraph No.33 is
on the basis of the decisions of the Supreme Court in the case of Arvind
Kejriwal (supra), Prabir Purkayastha (supra) and Vijay Madanlal
Choudhary (supra) and SC held that safeguards include the
requirement to have material in possession of Respondent No.1 and on
the basis of such material, the Authorized Officer must form an opinion
and record in writing the reasons to believe that the person arrested is
guilty of the offense.
28. In the present case, such material was admittedly already in
possession of Respondent No.1 on the basis of which a previous
opinion was already formed by Respondent No.1 and an Application in
writing was duly made to the Special Court under the statutory
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provisions of Section 50(2) and 50(3) of PMLA for confronting the said
material to the Petitioner and to record his further statement thereon.
Once such an opinion was formed in writing and allowed by a judicial
order, Respondent No.1 cannot proceed with arresting the Petitioner
by supplying him the grounds of arrest invoking Section 19 on the
basis of the very same material, which was the basis for forming the
earlier opinion. This can only be justified if there is a supervening
exigency or fresh material so incriminating in nature arisen or
discovered in the interregnum such that the Petitioner is required to be
arrested due to the same. Nothing of this nature has arisen so as to
warrant arrest by foregoing the earlier stand of confronting the
Petitioner with the material available and to record his statement. If
such a stance of arresting Petitioner is countenanced in such facts, it
will render the definition of investigation under Section 2(na)
completely negatory in the facts of the present case. Paragraph No.34
of the aforesaid decision in the case of Radhika Agrawal is also
relevant in this context and it reads thus:-
“34. The contention of the DoE that while “grounds of arrest” were
mandatorily required to be supplied to the arrestee, “reasons to
believe”, being an internal and confidential document, need not be
disclosed, was decisively rejected in Arvind Kejriwal [Arvind
Kejriwal v. Enforcement Directorate, (2025) 2 SCC 248 : (2025) 1
SCC (Cri) 695] . It was held that “reasons to believe” are to be
furnished to the arrestee such that they can challenge the legality of
their arrest. Exceptions are available in one-off cases where
appropriate redactions of “reasons to believe” are permissible. The
relevant portion reads: (SCC pp. 278-79, paras 41-43)
“41. Once we hold that the accused is entitled to challenge
his arrest under Section 19(1) of the PML Act, the court to
examine the validity of arrest must catechise both the
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existence and soundness of the “reasons to believe”, based
upon the material available with the authorised officer. It is
difficult to accept that the “reasons to believe”, as recorded in
writing, are not to be furnished. As observed above, the
requirements in Section 19(1) are the jurisdictional
conditions to be satisfied for arrest, the validity of which can
be challenged by the accused and examined by the court.
Consequently, it would be incongruous, if not wrong, to hold
that the accused can be denied and not furnished a copy of
the “reasons to believe”. In reality, this would effectively
prevent the accused from challenging their arrest,
questioning the “reasons to believe”. We are concerned with
violation of personal liberty, and the exercise of the power to
arrest in accordance with law. Scrutiny of the action to
arrest, whether in accordance with law, is amenable to
judicial review. It follows that the “reasons to believe” should
be furnished to the arrestee to enable him to exercise his
right to challenge the validity of arrest.
42. We would accept that in a one-off case, it may not be
feasible to reveal all material, including names of witnesses
and details of documents, when the investigation is in
progress. This will not be the position in most cases. DoE may
claim redaction and exclusion of specific particulars and
details. However, the onus to justify redaction would be on
the DoE. The officers of the DoE are the authors of the
“reasons to believe” and can use appropriate wordings, with
details of the material, as are necessary in a particular case.
As there may only be a small number of cases where
redaction is justified for good cause, this reason is not a good
ground to deny the accused's access to a copy of the “reasons
to believe” in most cases. Where the non-disclosure of the
“reasons to believe” with redaction is justified and claimed,
the court must be informed. The file, including the
documents, must be produced before the court. Thereupon,
the court should examine the request and if they find
justification, a portion of the “reasons to believe” and the
document may be withheld. This requires consideration and
decision by the court. DoE is not the sole judge.
43. Section 173(6) of the Code, permits the police officer not
to furnish statements or make disclosures to the accused
when it is inexpedient in public interest. In such an event, the
police officer is to indicate the specific part of the statement
and append a note requesting the Magistrate to exclude that
part from the copy given to the accused. He has to state the
reasons for making such request. The same principle will
apply.”
29. In view of what is held above, Courts can judicially review
the legality of arrest, since it is inherent in Section 19 in view of the
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safeguards to prevent its misuse.
30. In view of the aforesaid observations and findings, I am of
the considered opinion that the Petitioner has made out a case for
grant of reliefs as prayed for in the present Petition.
31. The Petition therefore stands allowed in terms of prayer
clauses ‘a’ and ‘b’ which read thus:-
“a. Issue an appropriate writ, order, or direction declaring
the arrest of the Petitioner by the Respondent No. 1 in the
subject ECIR No. ECIR/MBZO-1/53/2023 dated
26.12.2023 illegal and violative of s. 19(1) of PMLA, and
Articles 14 and 21 of the Constitution, and consequently,
issue appropriate directions for forthwith release of the
Petitioner from Judicial Custody;
b. Issue an appropriate writ, order, or direction quashing
and/or setting aside the remand order dated 23.06.2026
passed by the Ld. Additional Sessions Judge Designated
as Special Court under the PML Act, 2002 City Civil &
Sessions Court, Mumbai, remand order dated 29.06.2026
passed by the Ld. I/c Court for the Ld. Additional Sessions
Judge Designated as Special Court under the PML Act,
2002 City Civil & Sessions Court, Mumbai, and remand
order dated 04.07.2026 passed by the Ld. Additional
Sessions Judge Designated as Special Court under the
PML Act, 2002 City Civil & Sessions Court, Mumbai in
relation to the Remand Application No.903/2026 filed by
the Respondent No. 1 in relation to the subject ECIR No.
ECIR/MBZO-I/53/2023 dated 26.12.2023, and
consequently, also quash the subsequent remand orders,
if any, passed by the Ld. Additional Sessions Judge
Designated as Special Court under the PML Act, 2002 City
Civil & Sessions Court, Mumbai in relation to the
Petitioner;
32. Hence in view of the above order, Petitioner is forthwith
directed to be released from prison on the basis of an authenticated
copy of this order downloaded from the website of the Bombay High
Court.
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33. Writ Petition is allowed and disposed in the above terms.
[ MILIND N. JADHAV, J. ]
34. After this order is pronounced in open Court, Mr. Pendse
learned Advocate appearing for Respondent No.1 – ED persuades the
Court to stay the effect the validity of the order for a period of 2 weeks
to enable Respondent No.1 – ED to challenge the same before the
Supreme Court.
35. Considering the aforesaid order and the concluding
directions passed therein with regard to the release of the Petitioner
from custody, I have considered the aforesaid request made by Mr.
Pendse, however in view of the reasons contained in the order, the
request made for stay of this order stands declined.
[ MILIND N. JADHAV, J. ]
Ajay
Digitally signed
by AJAY
TRAMBAK
UGALMUGALE
Date:
2026.10.27
14:44:34 +0530
AJAY
TRAMBAK
UGALMUGALE
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